Global oil prices fell on Thursday as renewed hopes for Middle East peace talks eased concerns about potential supply disruptions. However, ongoing regional hostilities continued to support prices and limit the decline.
Brent crude futures dropped 0.7 per cent to $114.50 per barrel. Meanwhile, US West Texas Intermediate (WTI) crude fell 1 per cent to $101.74 per barrel during early trading.
US-Iran Diplomacy Weighs on Oil Prices
Reports of renewed diplomatic efforts between Washington and Tehran put pressure on crude prices. According to reports, US Vice President JD Vance sent a letter to Iranian Security Council chief Mohsen Rezaei to revive negotiations.
Furthermore, Qatari mediators reportedly presented Iran with a draft agreement aimed at ending the conflict involving the United States, Israel and Iran.
However, an Iranian official rejected the proposed terms as unacceptable. Iran’s foreign minister nevertheless indicated that Tehran remained open to diplomatic efforts.
These mixed signals have kept traders cautious about the prospects for a lasting agreement.
Middle East Tensions Limit Price Decline
Despite diplomatic hopes, attacks across the region continued to threaten energy supplies. Yemen’s government reported a Houthi attack on Aden airport, while the Saudi-led coalition said it had intercepted a missile heading towards eastern Saudi Arabia.
The Houthis had also claimed an attack on a major Saudi oil refinery. Saudi authorities had not immediately confirmed that strike. Consequently, fears of further escalation continued to limit losses in the oil market.
US Inventory Data Adds to Market Pressure
US energy companies reduced crude inventories by 1.9 million barrels during the week ending October 23, according to the Energy Information Administration. However, gasoline inventories increased by 3.9 million barrels, contrary to analysts’ expectations of a decline.
Market participants are now monitoring diplomatic developments, regional security risks and inventory changes for further direction.
Ultimately, oil prices will remain sensitive to any developments that could affect global supply or ease tensions across the Middle East.
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